RICS unveils plans to get tough on conflicts of interest
Conflict of interest professional statement, March 2017
New mandatory requirements on conflicts of interest for land, property and construction industry
- New conflicts of interest requirements for RICS professionals launched following extensive industry consultation.
- New global rules launched with mandatory requirements for UK commercial property investment market that bans controversial practice of dual agency
- All RICS Regulated firms and members will be required to meet the new standard to be effective from January 1st 2018.
- Major UK REITS, Land Securities and SEGRO commit to adopting new requirements ahead of 2018 deadline.
RICS is tightening up requirements for RICS professionals and Regulated Firms working in the land, property and construction sector, with the publication today of a new global professional statement on conflicts of interest.
The new professional statement, which will become mandatory next year, was launched on March 14 at MIPIM (a major international real estate exhibition and conference held in Cannes, France) having been developed as the result of an extensive consultation that saw thousands of industry professionals and regulatory experts offer their views.
The key findings from the global consultation showed that respondents would like to see RICS address:
- definitions of confidentiality
- full disclosure and transparency between parties
- the practice of ‘‘dual agency in the UK commercial property investment market
- tighter rules around multiple agency relationships
The new standards aim to address these concerns by providing both greater confidence for investors and increased clarity for those RICS professionals operating within these sectors.
Following on from this, in April, RICS will be publishing a UK professional statement for the commercial property investment market that bans the controversial practice of dual agency - known colloquially as ‘double-dipping’. Both of these standards will be effective from January 1st 2018.
The new UK professional statement will now see the controversial practice of dual agency whereby agents act for both sides in an instruction, banned in the UK.
On a global level, multiple agency relationships will now only be permissible with informed consent and through the professional statement, better processes will be introduced around managing that consent and promoting transparency. The professional statement will also offer clearer guidance on confidentiality, building greater understanding of where the use of information gained during a transaction should not be used.
RICS will seek to review the practice of dual agency outside of the UK market and consult on the requirement for further market specific standards. Already, some of the best-known commercial property firms, such as SEGRO, JLL and Land Securities have indicated their support for the new standards.
David Sleath, CEO of SEGRO plc said: “It is vital that agents and real estate professional advisers are seen to adhere to the highest standards, conducting themselves with the greatest integrity. For too long public trust in the industry has been blighted by concerns around conflicts of interest. Action urgently needed to be taken and I am pleased to see that RICS has taken the lead in banning the practice of ‘dual agency’ or ‘double-running’. Across our industry, we should view this as a very welcome move.”
RICS believes that it is uniquely placed to provide world-class standards for a global profession in land, property, construction and infrastructure. Having a regulatory model that holds the profession to this promise is vital to inspire confidence among clients and the public. This confidence is in turn vital to maintaining a successful and vibrant market for surveying services.
The RICS professional statement on Conflict of Interest, which is being launched today at MIPIM by RICS CEO, Sean Tompkins. Mr Tompkins said: “Issues around conflict of interest continue to risk undermining the reputation of a world-class profession. As the leading professional body in the land, property and construction sector, it was our job to take action. “I am extremely proud of our new professional statement, which I believe will rebuild trust, ensuring that RICS professionals and regulated firms provide confidence to investors and clients alike.”
For further details on the professional statements, please view: www.rics.org
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